| Aug 16, 2007

Feature Article - August 16, 2007

Back toHome

Legalese - August 16, 2007

Joint Accounts: Parent & Adult Child

by Susan Irwin, lawyer/Executive Director

Legalese is a column of general information and opinion on legal topics by the lawyers of Rural Legal Services, Box 359, Sharbot Lake, ON, K0H2P0, 613-279-3252, or 1-888-777-8916. This column is not intended to provide legal advice. You should contact a lawyer to determine your legal rights and obligations.

An ageing parent, particularly if he or she is in poor health, often needs help in managing his or her finances and daily affairs. Invariably, the responsibility of assisting the ageing parent falls to the adult child who lives closest. Powers of Attorney may be given and/or the child may be added to the parent’s bank accounts or other assets so that the child can freely manage the assets of the parent.


While joint ownership of bank accounts is often a matter of convenience, it can also be a source of contention if the parent does not make his or her “ownership” intentions clear. For instance, disputes can arise as to whether the adult child is a full owner of the account funds or merely a signatory for the parent, and whether upon the parent’s death the funds belong to the parent’s estate or to the surviving adult child.

Although it is generally assumed that ownership of joint property passes automatically to the survivor, the presumption is open to challenge depending upon the intended purpose of the joint holding. Two recent decisions of the Supreme Court of Canada have once again underscored the importance of determining a parent’s intentions in deciding the entitlement of an adult child to the proceeds of a joint account upon the parent’s death. The decisions are also noteworthy for restricting the general presumption of “survivorship” when property of the parent is held jointly with his or her adult child.

In both Pecore v. Pecore and Madsen Estate v. Saylor the Supreme Court of Canada determined that the common practice of ageing parents transferring their assets to joint accounts with their adult child in order to have that child assist them in managing their financial affairs was one of convenience and was not indicative of the parent’s intention to transfer ownership of his or her assets to that adult child. Rather, a more reasonable approach in today’s modern society was presumed by the court to be that the adult child holds the property in trust for the benefit of the ageing parent during his or her lifetime and upon the parent’s death, in trust for the beneficiaries of the parent’s estate. In legalese this is referred to as a presumption of resulting trust.

The Supreme Court also went on to hold that the presumption of resulting trust could be rebutted by the surviving adult child upon clear evidence that it was the parent’s intention to gift or transfer ownership of the account proceeds to the surviving adult child and that such was the parent’s intention in establishing the joint account. Evidence of such intention could include the control and use of the funds in the account. For example, if a parent gives the adult child the right to make withdrawals from the joint account for the child’s benefit as opposed to only for the parent’s benefit, this could be interpreted as evidence of the parent’s intention to gift the account proceeds rather than create a trust. The dependency of an adult child may also be a factor, as well as responsibility for payment of income tax, whether the bank documents provide for a clear and specific right of survivorship, and whether the parent has granted powers of attorney to the adult child on the account or to another child or children.

Consequently, while the establishment of a joint account as between a parent and adult child may be a matter of convenience, the importance of addressing the ultimate disposition of the account proceeds upon the parent’s death should not be overlooked or taken for granted. This is particularly true if the parent’s objective is to gift the account proceeds to the adult child upon his or her death in light of the presumption of resulting trust applicable to such arrangements in the absence of evidence of contrary intent

Support local
independant journalism by becoming a patron of the Frontenac News.